Venture Capital Investments and Merger and Acquisition Activity Around the World

55 Pages Posted: 6 Dec 2017

See all articles by Gordon M. Phillips

Gordon M. Phillips

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Alexei Zhdanov

University of Lausanne

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Date Written: November 2017

Abstract

We examine the relation between venture capital (VC) investments and mergers and acquisitions (M&A) activity around the world. We find evidence of a strong positive association between VC investments and lagged M&A activity, consistent with the hypothesis that an active M&A market provides viable exit opportunities for VC companies and therefore incentivizes them to engage in more deals. We also explore the effects of country-level pro-takeover legislation passed internationally (positive shocks), and US state-level antitakeover business combination laws (negative shocks), on VC activity. We find significant post-law changes in VC activity. VC activity intensifies after enactment of country-level takeover friendly legislation and decreases following passage of state antitakeover laws in the U.S.

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Suggested Citation

Phillips, Gordon M. and Zhdanov, Alexei, Venture Capital Investments and Merger and Acquisition Activity Around the World (November 2017). NBER Working Paper No. w24082. Available at SSRN: https://ssrn.com/abstract=3082265

Gordon M. Phillips (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alexei Zhdanov

University of Lausanne

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